Financial News and Notes 4/1/12 – 4/7/12

Economy

-The personal savings rate fell to 3.7% in February, for the lowest rate since August of 2009. 4/2

-Construction spending fell 1.1% in February despite the warm weather. 4/3

-More bad news came out of the Euro zone. Unemployment figures continued to worsen in March with the unemployment rate rising to 10.8%, the highest level since June 1997. Also, manufacturing slowed in March at a steep pace and had the 8th straight month of falling manufacturing activity. The news cast doubt on the region recovering quickly. 4/3

-Manufacturing activity in the US rose in March. 4/3

-The release of the minutes of the most recent Fed meeting showed the committee was not eager to pursue any additional stimulus programs. 4/4

-U.S. auto sales rose 13% compared to a year ago as car buyers look for fuel efficient cars. 4/4

-ADP announced that private employers hired 209,000 workers in March. 4/5

-A Thomson Reuters retail sales index rose 6.9% in March beating expectations. Warmer weather and an earlier Easter helped drive improved sales. 4/6

-Jobless claims continued to fall and hit a new 4 year low. 4/6

-The April unemployment report fell far short of expectations. While the unemployment rate dropped to 8.2%, the number of new hires, 120,000, fell well short of the estimated 205,000 that was expected. It was half the hiring level of the month before. The fall in the unemployment rate was due to people no longer looking for employment. 4/7

Corporate

-Express Scripts and Medco’s merger received government approval allowing for the formation of a sprawling pharmacy benefit manager. 4/3

-Yahoo is expected to begin laying of 2,000 staff members on Wednesday. 4/4

-The NASDAQ stock market won the desirable listing of Facebook once the firm goes public later this spring. 4/6

Regulatory

-The treasury froze pay for the top executives at AIG, GM and Ally Financial, the firms are the only ones remaining that have not fully repaid their bailouts. 4/7

Market

-Bill Gross and PIMCO’s Total Return fund had a strong start to the new year, bouncing back from a weak 2011. The fund was a top performer in the bond space and outperformed the BarCap Agg by 2.6%. 4/2

-April got off to a rousing start as the Dow rose 0.4% to reach its highest level since December 2007, and the S&P 500 gained 0.8% its highest finish since May 2008. The gains were driven by continued improvement in the US manufacturing sector. Europe gained 1.5% on the news, but Asia was mixed on Chinese manufacturing data which had conflicting reports. 4/3

-World markets saw stocks fall as investors were disappointed in the release of the Fed’s minutes which showed that they were not eager to use additional stimulus measures.  The U.S. was down 0.5% and Europe was down 1.1%. 4/4

-Global markets fell on renewed concerns over European debt, specifically Spain, and that the Fed and European central banks will soon draw to a close their support for the markets. The S&P 500 fell 1.0%, the Dow dropped 0.9%, Japan sank 2.3% and Europe was down 2.1%. 4/5

-European bond yields are back in investors focus as Spanish 10 year bond yields, the next country susceptible to a need for a bailout, have risen from 5.16% at the beginning of February to 5.81% a four month high. 4/6

-Stocks ended the week lower with the largest drop for the year on news of a lack of further fed intervention and renewed concerns over Europe’s economy and debt situation.  The S&P fell 0.7% and the Dow dropped 1.1%. Europe was down 1.6% on the week and Japan fell 3.9%. 4/6

-Bond markets were open on Friday while stocks markets were closed, thus bond traders had a chance to react to the disappointing unemployment news. The yield on the 10 year treasury dropped from 2.20% to 2.056%. 4/7

There is no guarantee that any investment strategy, including those described here, will be successful. Any investment or investment strategy can lose money. Past performance does not guarantee or predict future results. You should not assume that any discussion or information contained in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice from Raffa Wealth Management, LLC. This information was gathered from reliable sources but we cannot guarantee accuracy. Indexes do not reflect the fees associated with actual investments and such fees would reduce the performance illustrated.
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